Next-Gen Biotech Patent Tests Needed, Says Supreme Court

A Supreme Court ruling June 28 on idea patents disappointed those hoping for an overhaul of intellectual property claims for software, but it may inspire new patent tests aimed at the legally troublesome biotechnology field.

According to the court, the widely followed “machine-or-transformation” test — which limits patents to machines designed for a specific purpose, or processes that physically transform an object — is outdated. This test is also at the heart of at least two other legal cases currently being contested that could shape the future of the biotech business.

Machine-or-transformation might have been fine for the Industrial Age, “but there are reasons to doubt whether the test should be the sole criterion for determining the patentability of inventions in the Information Age,” wrote Justice Anthony Kennedy in the court’s June 28 ruling (.pdf) on Bilski v. Kappos.

Bilski involved a denied patent claim on methods for managing investor risk in a commodities market. Had the patent been granted, it would have set a precedent allowing for intellectual property claims on purely abstract concepts, rather than physical objects or technical processes.

Lower courts applied the machine-or-transformation test to Bilski, which failed to pass. The Supreme Court unanimously supported the earlier outcome — a risk hedging scheme should not be patented — but by denying that outcome’s rationale, they’ve paved the way for future patenting of ideas.

“The district judge said, ‘I’m bound by machine-or-transformation, and under that, these methods aren’t patentable.’ The Supreme Court decision puts the impetus on the federal circuit court to re-think that test,” said University of North Carolina intellectual property expert John Conley. “They can come up with something brand-new to deal with biotech.”

In April, a federal district court struck down the patent claims of Myriad Genetics on two breast cancer-linked genes, as well as risk-predicting tests on those genes. The gene patents were denied because products of nature are considered unpatentable, but the machine-or-transformation test was cited in denying diagnostic patents.

Critics say broad patents on diagnostic testing reduce competition and discourage researchers from developing new and better tests. Myriad says patents are needed to protect its business. A federal circuit court will hear their appeal next year.

A post machine-or-transformation standard could also be determined in Mayo v. Prometheus, a federal case involving Prometheus Laboratories’ claim on a method for determining drug dose by measuring a patient’s metabolic response. The Mayo Clinic says the method is so general that they shouldn’t be required to license it — but unlike Myriad’s diagnostics, it was approved under the machine-or-transformation test.

In its decision on Bilski, the Supreme Court refused to take sides. The court “today is not commenting on the patentability of any particular invention,” they wrote. “Nothing in this opinion should be read to take a position on where that balance ought to be struck.”

The court is saying, “We won’t tell you what to do,” said University of Michigan intellectual property professor Rebecca Eisenberg. “You have to figure it out for yourselves.”